It is indeed a privilege and honour to address this distinguished
gathering of economists. I am very happy that this meeting is being
attended by internationally acclaimed economists and academics from both
within and outside the country. I am especially heartened to see that
students of economics from all over Pakistan have been especially
invited to attend this meeting.

Over the years the Annual Conference of the Pakistan Society of
Development Economists has become one of the leading events on the
calendar of meetings where experts from various disciplines discuss
cutting edge issues that confront developing economies in general and
Pakistan's economy in particular. The Pakistan Institute of
Development Economics is to be congratulated for holding such
conferences on an annual and regular basis.

The President of the Society has mentioned that I have actively
encouraged the participation of economic experts, academics and
researchers in the policy planning process. I firmly believe that this
interaction will lead to framing of economic policies that respond to
our economic needs and lead to more sustainable and equitable economic
growth. I will continue to involve our body of economists in formulating
policies and thank you for your offer to work closely with our
government.

The theme of this year's Meeting "Economic Sustainability
in a Globalised World" is very timely and touches the very heart of
the economic challenge we face at the global and national level.

The world has witnessed a global financial meltdown which started
in the USA but spread to other parts of the world, both developed and
developing. This financial crisis has now hit the real economy, causing
a massive decline in global manufacturing output and global trade which
is the worst since the Great Depression in 1929. World output is
projected to shrink in 2009 and world trade expected to decline markedly
this year.

As demand falls globally, smaller developing countries like
Pakistan are adversely affected. What makes the global crisis even more
worrying is the fact that nobody is certain about the length and depth
of this crisis as business trust has evaporated.

For Pakistan this crisis came at a critical juncture when the new
democratic government had just taken over. Our government inherited a
very fragile economy. The unprecedented hike in oil and food prices
during the second half of 2007 and early 2008 created severe
macroeconomic imbalances. Poor economic management and inaction by the
previous government further worsened the situation. If immediate action
had not been taken the country would have faced default and economic
crisis.

Over the past year we have tried to grapple with this difficult
situation. There were difficult choices to be made and we gave priority
to restoring macroeconomic stability rather than short-run political
expediency. I can say with confidence that over the past year we have
made significant progress in rehabilitating the economy taking the
following five steps:

* First and foremost, we have moved decisively to restore
macroeconomic stability. This was essential to revive business
confidence, both foreign and domestic, and to engage the multilateral
and donor agencies in providing us critical support. We are committed to
ensuring a stable macroeconomic environment and will honour all our
commitments on achieving this with the support of the multilateral
agencies. Already our fundamentals are moving in a positive direction.

* Second, we have taken significant steps to reverse the
anti-agricultural bias which was a hallmark of the previous
regime's economic policies. We have provided incentives to farmers
through higher agricultural prices and timely provision of inputs to
boost agricultural output and it is already having a positive impact.

* Third, given our commitment to improve economic conditions of the
poor people of Pakistan, our government has launched for the first time
in Pakistan's history a major direct income support programme for
the vulnerable and those most in need. This is reflected in a six-fold
increase in resources earmarked for social protection this year. The
Benazir Income Support Programme is the leading programme, under which
Rs 34 billion have been earmarked for 2008-09. The programme will
benefit 3.4 million poor families and with better targeting the
programme will be expanded to 7 million poor households.

* Fourth, we have taken significant short and medium term measures
to overcome energy and water shortages through fast track energy
projects and building of small dams. We have launched a major effort to
raise resources through the Friends of Pakistan Forum to build the
Bhasha Dam and other major infrastructure projects.

* Fifth, we have given the highest priority to accelerate
development in Balochistan, FATA and other backward regions by
accelerating development projects in these areas.

I am acutely aware that the financial crunch has put enormous
pressure on the development budget. Hence I have given clear
instructions to the Finance and Planning Ministries that expenditure on
education and health must be protected at all costs. I believe that this
is essential to ensure long-term development and for us to compete in
the global economy.

Overall, despite the global recession the economy is showing
resilience under difficult circumstances. We are hopeful of positive
economic growth this year of around 3 percent and expect it to increase
to 4 percent next year. Inflation should come down to single digit in
the second half of this year.

The economy faces enormous challenges in the current global
downturn. Our priority is to protect investment in infrastructure, both
social and physical, so that our medium-term growth prospects are not
compromised. Most important of all is to ensure inclusive growth so that
all regions and all our people especially the poor and vulnerable groups
can share the benefits of economic development.

The Cabinet has approved a 9-Point Agenda that provides the overall
framework for our medium-term development strategy. It covers
macroeconomic stability, emphasis on agriculture as a leading sector,
increasing industrial competitiveness, human resources development and
good governance.

We look to the economists of Pakistan to assist us in
operationalising this 9-Point Agenda. We have always had good plans. My
government would like to ensure that they are translated into concrete
outputs which lead the way to improved living conditions and sustained
and equitable growth.

Let me in the end wish you the best in your deliberations and I
request the organizers to send me a summary of the main conclusions and
recommendations of this important meeting.